New Funds: BancBoston Backs Freshman Fund –

In a move that gives it a stronger presence on the West Coast, BancBoston Capital in November committed $200 million in equity to Harlingwood Equity Partners LLC, a San Diego-based private investment firm that focuses on middle-market consolidations.

BancBoston Capital, the private equity arm of BankBoston, is the sole limited partner behind Harlingwood, which will invest in deals exclusively in conjunction with the Boston firm.

Mark DeBlois, a BancBoston Capital managing director, said the firm partnered with Harlingwood because of its expertise in consolidating middle market companies.

Managing partners Fir Geenen and David White describe Harlingwood as an advisory firm before the debut fund.

DeBlois said Harlingwood will be opportunistic about the industries it invests in and will hire management on a deal-by-deal basis. He said Harlingwood will focus on acquiring companies with revenue of less than $150 million per year.

Geenen said the firm will use buy-and-build strategies as well as look for organic growth in sectors including business services, health care, technology services, distribution and light manufacturing.

Established in 1988, the firm has advised on over 150 transactions over the past several years. The firm expects to deploy $20 million to $50 million of equity per industry consolidation.

With Harlingwood, BancBoston Capital will have an even stronger foothold on the West Coast. The firm has an office in Palo Alto, Calif., which is strictly dedicated to investing in information technology businesses. In November 1998, the firm committed $150 million as the sole L.P. of Kinsman Capital LLC in San Diego, which acquires middle-market companies on a stand-alone basis.

DeBlois said Harlingwood has a different strategy than Kinsman and the two firms will not compete with each other for deals.

DeBlois said the two firms are already on familiar terms and he expects Harlingwood and Kinsman to refer deal prospects to each other and to BancBoston Capital.

Geenen said Harlingwood had decided some time ago to start raising equity for a debut buyout fund with a target of $200 million to $250 million. He said the fund-raising was a daunting process, but Brian Kinsman of Kinsman Capital introduced the firm to BancBoston Capital. “By good fortune, BancBoston gave us everything we needed,” Geenen said.

“The biggest problem in doing a first-time fund is getting enough capital to do the size of transactions we wanted to do,” he added.

DeBlois said Harlingwood will likely do from one to four consolidations per year and each one will require between $40 million and $100 million in equity. BancBoston Capital will continue to increase its equity commitment to Harlingwood over the next three to five years, he said.

Harlingwood has already approached some prospective acquisition targets and begun recruiting management teams for these targets. DeBlois said he anticipates announcing Harlingwood’s first platform acquisition within the next six months.